2023 (5) TMI 1034 - AT - Customs

Levy of penalty on Customs Broker u/s 114AA of the Customs Act, 1962 - use of false and incorrect material - discrepancies in respect of description of the goods mentioned in IGM and the description given in invoice and packing list (gross misdeclaration) - acting in good faith, exercising due diligence or existence of malafide intent in tacitly helping the importer to clear the consignment? - HELD THAT - The role of the Customs Broker is very crucial in the process of clearance of goods as they are required to do due diligence before facilitating filing of relevant documents for clearance of goods. As a regular Customs Broker, it is not expected that he would accept any document including KYC in a mechanical manner. He is expected to exercise due diligence to satisfy about the bonafide of the importer and the documents submitted by him. The employee of the Customs Broker in the instant case has in fact noted and admitted that there was some kind of impersonation and that should have alerted him and he should have brought to the notice of the Customs Authority immediately, instead he remained silent. This is the admitted position in the statement given by the Appellant and the Appellant is also not denying this fact nor giving any substantive reason about him being silent about the impersonation in the first place. He is responsible for the act of his employee also who is misrepresenting the CHB before the Customs Authorities. In the facts of the case on record, there is enough material to substantiate the allegation of malafide against the Appellant and therefore, Section 114AA has been rightly invoked by the Department and upheld by the Commissioner (Appeals). However, it is further seen that the Original Authority has imposed redemption fine of Rs.1,00,000/- each on used Xerox/ photocopy machines and spare parts. He has also imposed penalty of Rs.3,00,000/- on importer and Managing Partner of M/s Rupesh Xerox for their act of improper import. It is also noted that a penalty of Rs.1,00,000/- each has been imposed on Shri B. Sudhakar, employee of Nanda International, Shri Ashok and Shri Bhaskaran alias R. Saravanan also - Considering the roles played by each one of them, the penalty of Rs.1,00,000/- on the Appellant does not appear to be proportionate to his role in the attempted clearance of undeclared/ restricted goods. It is also informed by both the sides that no action was taken by the Department for revocation or suspension of CHA license for the aforesaid acts of Shri Chand and Shri Sudhakar, under the applicable law and regulation. The penalty of Rs.1,00,000/- imposed on the Appellant is reduced to Rs.25,000/- only. Except for the modification in the penalty amount, the Appeal filed by the Appellant is dismissed.

Summary

Issues involved:
The judgment involves setting aside an Order imposing a penalty under Section 114AA of the Customs Act, 1962 for the use of false and incorrect material.

Summary:

Issue 1: Penalty under Section 114AA of the Customs Act

The Appellant challenged the Order imposing a penalty for the import of used Xerox/photocopy machines under the guise of spare parts. The Original Authority found the Appellant liable for giving false information and upheld the penalty under Section 114AA. The Appellant argued lack of awareness of mis-declaration by the importer and cited obtaining KYC documents before filing the Bill of Entry. The Departmental Representative pointed out the Appellant's admission of knowing about the misrepresentation by the importer. The Tribunal considered whether the Appellant acted in good faith or with malafide intent in assisting the importer in clearing the mis-declared consignment. It was noted that the Customs Broker failed to exercise due diligence despite indications of impersonation. The Tribunal found sufficient evidence to support the allegation of malafide against the Appellant and upheld the penalty under Section 114AA.

Issue 2: Proportionality of Penalty

The Tribunal reviewed the penalty amounts imposed on various parties involved in the improper import. While the penalty on the Appellant was reduced to Rs.25,000 considering his role, the penalties on other parties were upheld. It was observed that no action was taken against the Appellant and another individual for the acts in question under the applicable law.

In conclusion, the Tribunal upheld the penalty under Section 114AA against the Appellant due to evidence of malafide intent. The penalty amount was reduced to Rs.25,000, and the Appeal filed by the Appellant was dismissed.